More stories from Lee Sherman

Related Stories

How to Budget with Mint

We often call it “a four-letter word,” but the truth is that a budget is an indispensable part of savvy financial planning. Setting a budget and sticking to it can help you become debt-free and save for future goals, be it your retirement, your child’s college education, a trip to France or a new car.

But what use is a budget if you fail to stick to it? At Mint.com, we believe that a budget that is too complex to set up and maintain is one you’re not very likely to keep. As a result, our goal has always been to make it as easy as possible for our users to create and stick to their budgets. That, in turn, enables you to set and achieve financial goals with ease.

How do you do that? We’ll explain below.

Automatically categorized transactions

The first step to creating a realistic budget is knowing where you spend and how much.

The good news: this is extremely easy to do — almost entirely automatic — if you are a Mint.com user. When you first sign up for Mint.com you’re asked to add all of your financial accounts, so that you can see all of your spending in a single place. You’ll get an at-a-glance view of your balances across all accounts — there’s no need to log into multiple websites and track multiple payment channels.

Once Mint.com starts tracking your transactions, it auto-categorizes them so that you can see exactly what you are spending and where. You don’t have to go through the laborious process of tagging your transactions: Mint does it for you.

It has a number of default categories, such as Food, Entertainment, Home, Kids and so forth, so that you not only know how much you spend at a particular merchant, but also in any given spending category.

But it’s flexible. If you’d like to categorize your iTunes purchases as food (music being food for the soul, after all), and not as entertainment, Mint won’t stop you. You can also create custom categories, such as Home Remodeling withing Home (or Food for the Soul within Food, if you will).

You’ll be able to tell immediately what your average spending is in any given category.

One of the most useful features of Mint’s budgeting tool is the abiltiy to uncover spending trends and pinpoint opportunities to save. For example, you can track your spending and income over time in order to get a true picture of exactly how much money you’ll have left over at the end of the month.

With that information, you can then take financial planning to the next level and set your financial goals, such as “Buy a new car,” “save for retirement” or “go on your dream vacation.” This is where Mint.com’s Goals feature comes in, making it just as easy to set and track goals progress as it is to set and track your budgets.

Mint.com lets you compare your spending from one year to the next or from one month to the next. You can set your budgets to roll over each month, so you can make adjustments as you go along.

Charting your course

With Mint.com, you can create a budget based on your actual spending, not based on some pre-determined notion of what you should be spending. Pie and bar charts break down your spending by category so that you can see exactly how much of your income goes to mortgage or rent, groceries, dining out, and much more.

What sets apart a budget you created with Mint from an Excel spreadsheet is that your Mint budget is based on actuals, not hypotheticals. We’ve added 16 interactive graphs that show you exactly how you are spending over time. With the graphs you can see exactly where you need to cut back in order to get your budget back on track.

Mint.com starts you out with a preliminary budget that you can adjust as needed to reflect your personal values and financial goals.

Budgeting scenarios

Mint.com’s budgeting tools are flexible enough to deal with a number of possible budgeting scenarios. Unlike with a spreadsheet or the tried and true back of the envelope approach, you can play around to see how changes in your spending or income will affect how much money you’ll have left over at the end of the month.

Other tools lock you into specifying a dollar amount for each category on a monthly basis, but Mint.com lets you enter irregular expenses that don’t occur monthly.

You can even see how one-time only expenses that you may not have accounted for will affect your savings plan.The ability to look forward allows you to use Mint.com as a planning tool that lets you see exactly how much money you’ll have left at the end of the month.

Monitoring Your Budget

You’ll want to make sure to log in to your account regularly to adjust for changes in your spending and income patterns. But Mint.com is also proactive in helping you with both setting up a budget and maintaining it. Not only do we auto-categorize your transactions and provide a starter budget. We also send you either SMS or email alerts for when bills are due or when there’s been unusual spending in any of your accounts. By keeping a closer eye on your spending you’ll be able to keep your budget on track.

Ready, Set, Goals

Now that you know how much money you’re spending each month and how much you have left over, it’s time to get familiar with Mint’s Goals feature. If you haven’t set a goal yet with Mint.com, give it a try. The process is just as streamlined and automatic as our budgeting tool. You can find out how to set and track financial goals with Mint.com here.

Mint’s approach to budgeting and goal-setting is simple, automatic and, above all, flexible enough to accommodate a variety of budgeting and saving approaches.